Car sales rev back up in June, but still trail boom years

1of 5In this Monday, May 7, 2018, photograph, a long line of 2018 and 2019 Cooper Countryman and Clubman models sits at a Mini Cooper dealership in Highlands Ranch, Colo. (AP Photo/David Zalubowski)Photo: David Zalubowski, STF / Associated Press

2of 5In this Sunday, June 24, 2018, photograph, unsold 2018 Suburbans sit at a Chevrolet dealership in Englewood, Colo. Neither higher gas prices nor rising interest rates could put a damper on U.S. auto sales during the first half of 2018. Sales rose 1.8 percent during the first half of the year, while June sales were up about 5 percent compared with a year earlier, according to Edmunds.com. (AP Photo/David Zalubowski)Photo: David Zalubowski, STF / Associated Press

New vehicle sales in the Houston area rebounded from a disappointing May, but they remain slow enough that a leading industry expert has lowered his forecast for the year.

Houstonians bought 23,021 vehicles in June, an increase of 16.1 percent over last year, according to the TexAuto Facts report from Sugar Land-based InfoNation. But that compares with a weak June last year, when dealers sold only 22,500 vehicles. InfoNation owner Steve McDowell said he had expected a stronger turnaround.

“It just didn’t turn out that way,” McDowell said. “June was not gangbusters.”

For comparison, he said, dealers sold 26,761 vehicles in June 2016 and 35,290 vehicles in June 2015. Nationally, auto sales were up 5.2 percent in June.

Local car sales fell for the first time this year in May, dropping 9.2 percent. And so far in 2018, Houston car sales are 9 percent ahead of where they were last year. Still, McDowell, whose company tracks vehicle title transactions, said he was disappointed by June’s performance.

Houston car sales remain sluggish compared to the energy boom years, when local car dealers sold a record 376,481 vehicles in 2015, McDowell said. He began this year predicting sales of a little more than 300,000 in 2018, but after a shaky start to the summer he now expects that figure to be a little less than 300,000.

“Coming off those record years, it kind of spoiled us in a way,” McDowell said. “Running along around 300,000 units a year, this is not an anomaly. I think that we’re in a different paradigm now.”

Car sales are plateauing as the quality of modern vehicles and the rise of longer-term financing are allowing Houstonians to drive their cars longer, McDowell said. The average age of a Houston-area car last year was 9 years, up from 7.3 years in 2000. On average, Americans drive their cars for 11 years.

At the same time, many millennials are eschewing new cars in favor of used, McDowell said.

“You’ve got a generation of people who aren’t as interested in buying a new car,” McDowell said. “They’d rather take a trip to Europe.”

Rising interest rates and uncertainty about steel and aluminum tariffs have yet to make a dent in Houston car sales, though they remain a threat, McDowell said.

Despite some sluggish months, Houston car sales are still up 9 percent so far this year, compared to the same time last year. Truck and SUVs still remain popular, making up about 71 percent of the new vehicles sold locally last month.

The average price for a new vehicle sold last month was $36,765, down slightly from last year.

Tony Gullo, who owns several new car dealerships in Montgomery County, said his Ford, Toyota and Mazda dealerships saw good sales in June, although he declined to share specifics.

Gullo, who has served as chairman of the Houston Auto Show for 35 years, said he has noticed people are driving their cars longer and replacing them less frequently. However, his dealerships continue to sell cars because the population is booming in the north Houston area, he said.

“All of these suburbs whether it be Sugar Land or Rosenberg or Katy, they’re busting at the seams,” Gullo said. “They’ll pick up the slack. I think we’re going to end up pretty fine.”